Mobile operators and banks must develop new product offerings if they are to succeed in meeting the demand of a projected one billion mobile phone users with m-banking experience in 2017, according to a new report.
“There are mutually beneficial opportunities to collaborate and both players must develop new product offerings which are secure, fast and easy to use,” said Nitin Bhas, report author and senior analyst at Juniper Research.
Specifically, Bhas believes the two players need to create more interoperable ecosystems and explore and integrate common functionalities.
“Mobile banking and payments are merging into one platform,” explained Bhas.
“The key for banks and operators is to collaborate, increase the scope of service offerings by launching VAS to decrease churn and attract new customers.”
The report found that there are two different mobile banking models: one is operator led, where telcos sell comprehensive financial services and support virtual accounts over their own networks with banks playing almost no part in daily account management.
The other is where the two sides create joint ventures to increase the scope of service offerings and leverage each other’s expertise.
“JVs between banks and operators are the best models for operators, especially in developing markets,” said Bhas.
“They can leverage resources and knowledge, exploit brand recognition and their existing consumer bases to mutual advantage.”
Unsurprisingly, in the developed economies of Western Europe uptake is highest among the youth sector where people organise their lives around mobile devices, the report found.
Said Bhas: “Banks should be wary about limiting access to the internet by allowing users to do everything via their mobiles and need to convince customers that security is equal to that of other systems.”
Juniper expects apps to dominate in developed markets – already banks are seeing increasing numbers of people using them for access each month.
The potential is clear.
One billion people globally will have used mobile devices for banking information purposes by 2017 compared to 590 million by end 2013, according to the report.
Around half of all mobile subscribers are “unbanked” currently with limited access to traditional financial services.
Further, the overall number of people using mobile devices for banking accounts for over 15 percent of the total mobile subscriber base.